NAD FINDS LG ELECTRONICS U.S.A VIOLATED NAD PROCEDURES

New York, NY – Feb. 2, 2012 – The National Advertising Division of the Council of Better Business Bureaus has determined that LG Electronics, U.S.A., violated the procedures that govern the advertising industry’s system of self-regulation.

NAD learned that an LG executive contacted customers, including electronics dealers and retailers, regarding the outcome of a recent NAD case. NAD procedures and the NAD participation agreement signed by all parties at the outset of a case make clear that participants in NAD proceedings may not use the NAD’s decisions to promote their products or brands to their customers.

In the underlying case, NAD:

•     Found that LG’s “broad line claims are premised upon a single test of the parties’ entry-level model 3D televisions” although the record was clear that all three parties make several models of 3D televisions within their respective lines – from entry-level models to high-end technological 3D sets – each configured with any number of combinations of features and attributes.
•    Found that consumer-perception evidence upon which certain LG advertising claims were based was materially flawed.
•    Recommended that the advertiser discontinue the claims that “4 out of 5” consumers preferred LG’s passive 3D over Samsung’s active 3D for picture quality, color, overall 3D experience, glasses, etc.
•   Recommended that LG discontinue its characterization of the tested Samsung 6420 model as Samsung’s “leading model”
•   Recommended that LG discontinue its unsupported, unqualified banner/brand advertisements claim that LG is “The First Choice for 3D TV, the “Clear Winner” and related claims.
•   Recommended that the advertiser discontinue its falsely disparaging claims: “HEY…SAMSUNG, YOUR 3D RESULTS ARE IN. AND IT’S NOT A PRETTY PICTURE” and (2) “HEY…SAMSUNG, RECHARGEABLE GLASSES, WHAT’S NEXT, PEDAL-POWERED REMOTES?”
•   Recommended that the advertiser continue its efforts to ensure that all advertising materials containing its unsupported claim that consumers preferred LG 3D technology “3 to 1” over Samsung 3D technology, be permanently discontinued.
•   NAD concluded that the advertiser provided a reasonable basis for its “Picture Perfect 3D from Any Angle” claim.

LG noted at the close of the case that it would take the NAD’s views into consideration in its advertising going forward.

NAD examines advertising claims to assure that they are truthful, accurate and not misleading and NAD’s review is impartial. Self-regulation is a voluntary process and participating companies agree that decisions will not be used for promotional purposes.

NAD’s inquiry was conducted under NAD/CARU/NARB Procedures for the Voluntary Self-Regulation of National Advertising.  Details of the initial inquiry, NAD’s decision, and the advertiser’s response will be included in the next NAD/CARU Case Report.

About Advertising Industry Self-Regulation: The National Advertising Review Council (NARC) was formed in 1971. NARC establishes the policies and procedures for the National Advertising Division (NAD) of the Council of Better Business Bureaus, the CBBB’s Children’s Advertising Review Unit (CARU), the National Advertising Review Board (NARB) and the Electronic Retailing Self-Regulation Program (ERSP).

The NARC Board of Directors is composed of representatives of the American Advertising Federation, Inc. (AAF), American Association of Advertising Agencies, Inc., (AAAA), the Association of National Advertisers, Inc. (ANA), Council of Better Business Bureaus, Inc. (CBBB), Direct Marketing Association (DMA), Electronic Retailing Association (ERA) and Interactive Advertising Bureau (IAB).  Its purpose is to foster truth and accuracy in national advertising through voluntary self-regulation.

NAD, CARU and ERSP are the investigative arms of the advertising industry’s voluntary self-regulation program. Their casework results from competitive challenges from other advertisers, and also from self-monitoring traditional and new media. NARB, the appeals body, is a peer group from which ad-hoc panels are selected to adjudicate NAD/CARU cases that are not resolved at the NAD/CARU level. This unique, self-regulatory system is funded entirely by the business community; CARU is financed by the children’s advertising industry, while NAD/NARC/NARB’s primary source of funding is derived from membership fees paid to the CBBB. ERSP’s funding is derived from membership in the Electronic Retailing Association. For more information about advertising industry self-regulation, please visit www.narcpartners.org.